THE IMPACT OF FOREIGN DIRECT INVESTMENT ON THE ECONOMIC GROWTH OF THE REPUBLIC OF SRPSKA

Abstract

This research aims to explore the impact of foreign direct investment (FDI) on gross domestic product (GDP) per capita in The Republic of Srpska. Through data analysis from the period 2020-2023, using correlation, regression, and ANOVA analysis, we investigate the complex relations among these key variables of economic development. Our goal is to understand whether and to what extent foreign investments contribute to the economic growth of this region and what the impact of the COVID-19 pandemic and high inflation has been on this relation. Responding to this research question, our analysis indicates a strong positive correlation between FDI and GDP per capita, implying a significant positive impact of foreign investments on economic growth in The Republic of Srpska. Regression analysis further confirms this conclusion, showing that any increase in foreign direct investment results in an increase in GDP per capita. We have also identified the negative impact of the COVID-19 pandemic and high inflation on investments and GDP, highlighting the need for adequate policies and strategies to support economic recovery and sustainable growth.